The Iowa House has passed a bill to temporarily raise the premium tax on private companies that offer HMOs to Iowans as well as the three companies that manage Iowa’s Medicaid program.
That nine-month-long maneuver would send $124 million in federal matching funds to the State of Iowa to cover a deficit in Medicaid. Representative Shannon Lundgren a Republican from Peosta, said it’s “responsible budgeting” and it’s being done in many other states.
“This bill is funding a Medicaid system, the system that takes care of our most vulnerable people in the state of Iowa,” Lundgren said. “…If we don’t do this increase for a short nine month period of time, we lose federal funds. And why should those funds go to other states when they could be supporting Iowans?”
Representative Austin Baeth, Democrat from Des Moines, said this tax will cost Iowans who buy insurance. “That’s how business works. We know that when property taxes go up, landlords raise the rent. We know that when wholesalers are charged tariffs, they pass that fee on to consumers,” Baeth said. “…There are other ways to get tax revenue, folks. You could start taxing millionaires and billionaires again…Instead this legislation goes after everyday Iowans and especially the most vulnerable.”
Lundgren said when the state reduced the premium tax a few years ago, Wellmark raised the cost of its insurance premiums and she said it will be “a business decision” if the company, which has been a prominent critic of the bill, passes this tax hike on to its customers. “Wellmark Blue Cross and Blue Shield generated $8.7 billion in state revenue, reported over $357 million in profits and ended 2025 with an ending balance of $3.17 billion in surplus,” Lundgren said.
The bill passed on with the support of 53 House Republicans. Ten other Republicans joined 30 Democrats in opposing it. Governor Reynolds has said Iowa faces a March 31 federal deadline for making this change and the bill has to clear the Senate next before she can sign it into law.
